July 22 (Bloomberg) -- Herbalife Ltd. shares fell the most
in three months yesterday after billionaire Bill Ackman vowed to
show Enron Corp.-like fraud at the seller of supplements and
weight-loss shakes.

Ackman, head of Pershing Square Capital Management LP, said
on Bloomberg Television that his firm has devoted $50 million of
investors’ money to prove that Herbalife is a pyramid scheme.
The results of the undercover investigation, which focuses on
Herbalife’s nutrition clubs, will be released at a presentation
today in New York.

“Trust me, when you see the stuff we have,” Ackman said
in an interview on “Market Makers” with Stephanie Ruhle and
Erik Schatzker, “you will conclude the money was well spent.”
He suggested that the nutrition clubs -- part of Herbalife’s
direct-selling approach -- resemble the fake trading rooms set
up by Enron before accounting fraud led to that company’s
bankruptcy in 2001.

Ackman has waged a battle to shut down Los Angeles-based
Herbalife since December 2012. He has bet $1 billion against the
company, saying it misleads distributors, misrepresents sales
figures and sells a commodity product at inflated prices. U.S.
regulators and law enforcement also are investigating
allegations that the business is a pyramid scheme.

Stock Decline

Herbalife’s stock fell 11 percent to $54.02 yesterday,
marking the biggest decline since April 11. The shares have
tumbled 31 percent this year. Herbalife shares traded at the
equivalent of $54.01 at 10 a.m. in Frankfurt in trading of 573
shares.

Today’s presentation, which will be webcast starting at 10
a.m., will give new information to back up Pershing Square’s
claims, the hedge fund said in a separate statement.

“An in-depth analysis and examination of these clubs --
which Herbalife claims are simply social gatherings that bring
people together to focus on good nutrition and exercise --
reveal that they are a core driver of Herbalife’s pyramid
scheme,” Pershing Square said.

Herbalife responded to the statements yesterday on Twitter,
saying it was confident in the integrity of the company and that
“the truth will prevail.”

“Ackman’s theatrics are increasingly desperate,” the
company said through its HerbalifeTruth account. Herbalife “is
proud of role that nutrition clubs play in helping people lose
weight and stay healthy.”

Ackman said on Bloomberg Television that his firm will turn
over its findings to regulators.

“Our goal was to catalyze regulatory interest in the
company,” Ackman said. “We spent the last year with undercover
investigators in multiple countries and in the United States
participating and trying to figure out -- and ultimately
figuring out -- how nutrition clubs work and we have hundreds of
hours of recorded conversations.”